2 Research Update: Banca Popolare dell'alto Adige Outlook Revised To Positive From Stable; 'BB/B' Ratings Affirmed Overview We expect that Banca Popolare dell'alto Adige's (BPAA) asset quality--after the merger with Popolare di Marostica--could recover faster than Italian peers'. Our improving forecast for BPAA is supported by our view of more favorable economic and operating conditions for Italy's banking sector. We are therefore revising the outlook on BPAA to positive from stable and affirming our 'BB/B' long- and short-term counterparty credit ratings on the bank. The positive outlook on BPAA reflects our opinion that the bank's better-than-peers risk management and expected customer loans growth could result in a consistently lower-risk profile loan book. Rating Action On May 23, 2016, S&P Global Ratings revised the outlook on Banca Popolare dell'alto Adige (BPAA) to positive from stable. At the same time, we affirmed our 'BB/B' long- and short-term counterparty credit ratings on the bank. Rationale The outlook revision on BPAA reflects our view that the bank's asset quality--after the merger with Popolare di Marostica--is likely to perform better than we previously expected, and therefore likely to recover faster than the Italian system average. Our new forecasts are driven by our view of more supportive economic and operating conditions for Italy's banking sector over the next couple of years. In addition, we believe that BPAA can benefit from the increasingly favorable operating environment that characterizes the northeastern regions of Italy, in particular, the wealthy Trentino Alto Adige, traditionally displaying higher than average GDP per capita values and lower unemployment rates. We understand that BPAA has successfully completed the review of all the positions in Marostica's customer loans portfolio as part of the acquisition process. In addition, Marostica had already cleaned up part of its portfolio before merging with BPAA, increasing its coverage through provisions to about 48% at end-2014, before its acquisition. Therefore, in the context of a more positive economic environment, we expect BPAA's credit losses to remain below the level we expect for the Italian system average over the next two MAY 23,

3 Research Update: Banca Popolare dell'alto Adige Outlook Revised To Positive From Stable; 'BB/B' Ratings Affirmed years--estimated at 0.80 basis points of customer loans at end We estimate a decreasing trend for BPAA's gross nonperforming assets (NPAs) as a percentage of its customer loans from a post-merger value of 15.2% at end We think that BPAA's stronger-than peers risk management practices, in addition to higher growth in customer loans than the industry average, could contribute to an improving asset quality trend. We believe that BPAA will be able to consolidate its market share in the Veneto region--ex-marostica's historical market--thanks to the ongoing advantageous competitive situation, created by the progressive franchise loss by other peers operating in the region. We anticipate that the bank will be able to support its asset growth, thanks to the 96 million capital increase successfully completed in February 2016, while keeping its projected risk-adjusted capital (RAC) ratio sustainably above 5.0% over the next two years. BPAA's profitability will remain positive but modest. We believe that BPAA will support a slightly increasing net interest margin through assets growth on one side and cost-of-funding reduction on the other. Outlook The positive outlook on BPAA reflects our opinion that BPAA's asset quality will likely continue to outperform the Italian system average over the next months. As such, we could raise the long-term rating on BPAA if the bank: Improves its net NPA ratio to close to 6%, the level of BPAA at end-2014 before the acquisition of BP Marostica; Reduces its gross NPA ratio to at least 13%, compared to 15.2% at end-2015, thus outperforming our expectations for the system average; and Demonstrates resilience in interest margins, and maintains its RAC ratio sustainably above 5%. Alternatively, we could also raise the ratings if we anticipated an improvement in the economic and operating environment in Italy, supported by stronger projected capitalization. We could revise the outlook to stable if BPAA's asset quality metrics were not outperforming the Italian banking system average and if we were to take a less positive view of the economic and funding conditions affecting Italian banks. Ratings Score Snapshot To From MAY 23,

5 Research Update: Banca Popolare dell'alto Adige Outlook Revised To Positive From Stable; 'BB/B' Ratings Affirmed RatingsDirect at and at spcapitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings public website at Use the Ratings search box located in the left column. Alternatively, call one of the following S&P Global Ratings numbers: Client Support Europe (44) ; London Press Office (44) ; Paris (33) ; Frankfurt (49) ; Stockholm (46) ; or Moscow 7 (495) MAY 23,

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Research Update: Government Development Bank for Puerto Rico Downgraded To 'CC' From 'CCC-' On Imminent Default; Outlook Negative Primary Credit Analyst: Brendan Browne, CFA, New York (1) 212-438-7399;